The Mortgage Journey

 As steps in life go, buying a home is certainly one of the big ones. But if you know what’s involved in the mortgage process, you can see it instead as a number of small, easily-managed steps. What’s more, you don’t have to take them on your own. You’re thinking about applying for a mortgage, here’s a quick run-down of the factors that affect mortgage approval and what mortgage amount you can borrow.

 

 

 

 

 

Your Age 

This will determine the mortgage term which may be offered to you. Normally, you can choose a term up to 35 years for First Time Buyers and up to 30 years for those moving home. Your retirement age will impact the mortgage term available to you. So if you are affected by the recent decisions about extending the retirement age out to 70, it will have a correlating effect on mortgage term.

Your Salary 

The second thing the banks will do is review your annual income, this includes any guaranteed bonuses or overtime that may form part of your annual finances.

Existing Loans 

Many home buyers have existing loans which is not a problem in itself. These could be small personal loans. But don’t worry, what is important is how this impacts your available income each month, and having existing loans may reduce the amount of money you can borrow as a result.

 Saving Record

We have to highlight time and time again the importance of saving in your application to getting mortgage approval. First, do you have a deposit for your house? The deposit amount required will hinge on whether you are a first-time buyer or changing house. The borrowing amount will also affect what deposit percentage is required.  The second element is ‘regular saving’.  You need to prove how you save money on a regular basis. We would suggest Easy Access Savings accounts that force you to save monthly and offer a better potential for return than you would be getting on deposit in the bank.

Credit Record 

What I am seeing more often is that people are quick to borrow and always slow to pay back. It’s vital to be able to show that, if you have borrowed money before, you were able to repay the money back.

Borrowing Amount 

Lenders can consider loans up to 3.5 times a single applicant’s gross annual income, and up to 3.5 times joint applicants’ gross income. The amount available will naturally vary depending on individual circumstances.

 

 

 

 

 

Single or Joint 

If you are applying as a couple, your home loan application will obviously consider all of the elements above for each person and use a combined set of estimates in order to calculate a mortgage loan offer for you.

Loan To Value 

How large is the loan required compared to the value of the property itself (this is termed ‘Loan to Value’).

 

 

 

 

 

 

 

 

 

 

 

 

 

Single or Joint 

If you are applying as a couple, your home loan application will obviously consider all of the elements above for each person and use a combined set of estimates in order to calculate a mortgage loan offer for you.

 Seek Independent Advice 

It is important to remember the bank will only advise you on the products they have to offer whereas a financial broker can offer you greater options – this also includes mortgage protection insurance which is a legal requirement in most cases. At Alpha Wealth we will review all relevant products on the market finding you the most suitable cover. Why don’t you test us on this?

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